Siel Energy India Limited vs The Union Of India on 31 July, 2024

Outcome**
The Andhra Pradesh High Court allowed the writ petitions, setting aside the rejection orders (original and appellate). It directed the 2nd respondent to reconsider the petitioner's refund applications, permitting the petitioner to submit the Regional Energy Account (REA) of the previous month as proof of export for refund applications made in the succeeding month, provided other requirements are met.

2. Core Issue
The core issue was whether the Regional Energy Account (REA) for the preceding month could be considered valid proof of export for the purpose of claiming Input Tax Credit (ITC) refund under GST, when the refund application was filed in the succeeding month, given that electricity supply is a continuous supply of goods and invoices are raised in the succeeding month as per the power purchase agreement.

3. Key Facts
* The petitioner, M/s. SEIL Energy India Limited, generates and sells electrical power.
* For the period January 2022 to October 2022, the petitioner supplied electricity to M/s. Bangladesh Power Development Board.
* The petitioner claimed this supply was an export, exempted under the IGST Act, and sought a refund of accumulated ITC.
* Initially, refund applications were rejected for not furnishing a "bill of shipping".
* Prior writ petitions (W.P.No.11194 of 2021 and batch) were filed challenging this, arguing electricity is intangible and a bill of shipping is not applicable.
* During the pendency of earlier cases, Rule 89 of the CGST Rules, 2017, was amended, substituting the requirement of a bill of shipping with the Regional Energy Account (REA) as proof of export for electricity.
* A Division Bench of this Court, in a judgment dated 26.08.2022 in W.P.No.11194 of 2021 and batch, held this amendment to Rule 89 to be retrospective.
* Subsequently, the petitioner produced the REA for the months January 2022 to October 2022.
* However, the refund applications were again rejected by the 2nd respondent (and upheld by the Appellate Authority in some cases) on the ground that the REA submitted for a particular month's refund application was for the previous month (e.g., REA for December 2021 was submitted for the January 2022 refund application).
* The power purchase agreement between the petitioner and M/s. Bangladesh Power Development Board stipulated that invoices for electricity supply for a particular month were to be raised by the 7th day of the succeeding month.

4. Arguments (Taxpayer vs Revenue)
* Taxpayer (Petitioner):
* The supply of electricity constitutes "continuous supply of goods" under the CGST Act.
* As per Section 12(2) read with Section 31(4) of the CGST Act, the "time of supply" for continuous supply of goods is fixed at the date of issue of the invoice (or last date required to issue it), or the date of payment, whichever is earlier.
* Since invoices for a given month's supply are legally required to be raised by the 7th day of the succeeding month, the REA pertaining to the actual supply period (i.e., the previous month) is the appropriate document for the refund application filed in the succeeding month, reflecting the legal fiction of time of supply.
* The authorities' interpretation of "relevant period" as strictly the month of application, ignoring the time of supply provisions for continuous goods, is incorrect.
* Revenue (Respondents):
* Rule 89 of the CGST Rules requires the production of materials like REA for the "relevant period."
* The "relevant period" must be strictly construed as the month for which the refund is being sought.
* Since the petitioner failed to submit the REA for the exact month of the refund application, the rejection orders are valid and cannot be faulted.
* The Rule is clear and unambiguous, and the petitioner's interpretation is contrary to it.

5. Court’s Reasoning
* The Court analyzed Section 2(32) of the CGST Act, which defines "continuous supply of goods," and Section 12 of the CGST Act, which determines the "time of supply."
* It specifically referred to Section 12(2) of the CGST Act, which states that the time of supply of goods is the earlier of the date of issue of the invoice (as per Section 31(1)) or the date of payment.
* The Court also relied on Section 31(4) of the CGST Act, which mandates that for continuous supply of goods involving successive statements or payments, the invoice must be issued before or at the time each statement is issued or payment is received.
* The Court reasoned that for continuous supply of goods like electricity, the actual moment of continuous supply is not the relevant factor for taxation. Instead, it is the point in time when the invoice is raised or payment is received (whichever is earlier) that determines the "time of supply" for tax assessment.
* Given that the power purchase agreement required the petitioner to raise invoices for a month's supply by the 7th day of the succeeding month, the Court concluded that the supply of electricity in December, for instance, would, by legal fiction, have its "time of supply" fixed in January (when the invoice is presented).
* Therefore, furnishing the REA for the preceding month when applying for a refund in the succeeding month is in complete alignment with these statutory provisions, as it correctly reflects the period of actual supply for which the time of supply (and thus tax liability and ITC claim) is crystallized in the subsequent month.

6. Statutory References
* Integrated Goods and Services Tax Act, 2017 (IGST Act)
* Central Goods and Services Tax Act, 2017 (CGST Act)
* Section 2(32) - Definition of "continuous supply of goods"
* Section 12 - Time of supply of goods
* Section 12(2)
* Section 31(1) (referenced within Section 12(2)(a))
* Section 31(4) - Time for issue of invoice in case of continuous supply of goods
* Central Goods and Services Tax Rules, 2017 (CGST Rules)
* Rule 89

7. Precedents Cited
* W.P.No.11194 of 2021 and batch (Judgment dated 26.08.2022 by a Hon’ble Division Bench of this Court) - Cited for the view that the amendment to Rule 89 of the CGST Rules, 2017 (substituting bill of shipping with REA) should be treated as retrospective.